Our company / patented product has a copycat. They are infringing our patent.
As a small startup we can either forge ahead with building our business or use our capital to sue them. Sinking both of us bc of the costs associated with a lawsuit. Any alternative solutions?
Just ignore them. Are you really going to lose a competition against somebody who can't even come up with their own ideas?
Have you considered approaching the other party regarding a licensing arrangement?
Alternatively, if you decide to sue and your patent is in the software or business methods sector, this could be risky. A number of software/business methods patents have been found invalid in view of recent Supreme Court Decisions (Alice v. CLS 2014).
Either way, it would be worth an hour or two of an attorney's time (specializing in Intellectual Property) to sort out your options.
The legal way will be more expensive than you can imagine. Assuming you're in the US, you're operating under a set of laws built by lawyers to ensure they never run out of work. Suing is easy. Recovering costs is not.
Lots of people had the same ideas at the same time. Execution wins. Zuckerberg is a perpetual thief, most recently cloning Snapchat. Think anyone cares?